Sensex Crashes 839 Points on Border Tensions; Realty and Healthcare Stocks Bleed

Mon, 31 Aug Closing

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After staging a gap-up opening, Indian share markets reversed gains and ended deep in the red, after tensions between India and China border near Ladakh escalated.

Reports state that Chinese troops violated consensus and carried out provocative military movements on the night of August 29-30, aimed at changing the status quo at the Line of Actual Control (LAC).

Selling pressure was also seen as market participants booked profits ahead of the data for April-June 2020 quarter gross domestic product (GDP) to be released today post market hours.

Economists project the GDP may decline by 19.2% in the April to June quarter from a year ago, the sharpest contraction since the nation started publishing quarterly figures in 1996. India's FY20 GDP had declined to 4.2% from 6.1% in FY19, the slowest in the last 11 years.

In early trade today, Sensex rose as much as 540 points and reclaimed the 40,000-mark.

At the closing bell, the BSE Sensex stood lower by 839 points (down 2.1%).

The NSE Nifty closed down by 260 points (down 2.2%).

The SGX Nifty witnessed huge selling pressure and was trading at 11,350, down by 332 points, at the time of writing.

The fall in the midcap and smallcap index was brutal. The BSE Mid Cap index ended the day down by 3.8%. While the BSE Small Cap index plunged 4.4%.

On the sectoral front, realty stocks and healthcare stocks were the hardest hit.

Asian stock markets ended on a mixed note today. As of the most recent closing prices, the Hang Seng was down 1% and the Shanghai Composite stood lower by 0.2%.

The Nikkei rallied 1.1% aided by news Warren Buffett's Berkshire Hathaway had bought more than 5% stakes in each of the five leading Japanese trading companies.

The rupee is trading at 73.60 against the US$.

Gold prices are trading up by 0.5% at Rs 51,698 per 10 grams.

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Speaking of the current stock market scenario, note that markets have moved up sharply since they bottomed out in March. But it seems that they are running out of steam.

In his latest video, Apurva Sheth draws a Plan B for you if the markets start moving southwards.

Tune in to find out more:

Moving on to stock specific news...

Wockhardt was among the top buzzing stocks today. Shares of the company were locked in the 5% lower circuit band despite turning profitable in the June quarter of FY21.

The pharmaceutical company posted consolidated net profit of Rs 7.6 billion, as against net loss of Rs 368.8 million in the year-ago quarter.

This was mainly on account of exceptional items in connection with the transfer of a business comprising 62 products and Baddi facility to Dr Reddy's Laboratories.

However, the earnings were weak on the operational front. Total income stood at Rs 6.1 billion in the quarter under review. It was Rs 7.33 billion in the year-ago period.

Revenue from India Business declined by 52.5% to Rs 1.2 billion in Q1FY21 and revenue from USA business is down by 38.7% to Rs 1.2 billion in Q1FY21.

The company reported negative EBITDA for the quarter at Rs 490 million as against positive EBITDA of Rs 560 million in Q1FY20.

In a filing to exchanges, the company said it launched new chemical entity (NCE) during the quarter in the Indian pharma market. Products have been launched under the tablet and injection category under the brand name 'Emrock O and Emrock'.

The filing added that divestment of business undertaking to Dr Reddy's Laboratories was accomplished during the quarter and Rs 14.8 billion has been received towards the same.

Wockhardt share price ended the day down by 5%.

Moving on to news from the automobile sector, Tata Motors and Hyundai Motor have emerged winners in a tender to supply 250 electric passenger vehicles to the government floated by Energy Efficiency Services (EESL).

Out of the total procurement, Tata Motors will supply 150 Nexon electric compact SUVs while Hyundai will supply 100 units of its Kona electric SUVs.

This is part of a tender floated by the state-owned government transport provider to acquire 1,000 electric vehicles from automobile manufacturers.

As per the latest deal, EESL will procure Tata Nexon at Rs 14.85 lakh each, just Rs 14,000 cheaper than its ex-showroom price of Rs 14.99 lakh. Kona, which offers a higher range, will be procured at an 11% lower price band of Rs 21.1 lakh.

Earlier this month, Tata Motors' Chairman N Chandrasekaran said that the company aimed to reduce its total debt to near-zero levels in three years and generate free cash flows from FY22 onwards.

Chandrasekaran, while addressing shareholders at Tata Motors' 75th annual general meeting, said the company would also look to unlock non-core investments in order to deleverage the business.

In other news, Maruti Suzuki today celebrated three years of its newest retail channel arena.

Over the last three years, Maruti Suzuki has further strengthened its network of over 2,300 sales outlets in India with 745 Maruti Suzuki Arena showrooms.

Speaking of the automobile sector, note that the sector has rebounded sharply from its March lows.

Have a look at the chart below:

Healthcare sector is at the top, followed by the automobile sector.

As per Apurva Sheth, the auto index entered the greed phase in September 2019 and will stay there until December 2021. This means there is still a lot of fuel left for auto stocks.

How automobile stocks perform in the coming months remains to be seen. Stay tuned for more updates from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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